March natural gas is seen opening 5 cents lower Friday morning at $2.67 as traders factor in a tempered weather outlook and analysts mull further price weakness. Overnight oil markets were mixed.

Weather forecasts continued a trend of moderation overnight. “[Friday’s] 6-10 day period forecast is not as cold or warmer than the previous forecast across much of the nation,” said WSI Corp. in its morning report. “This is due to model trends and the day shift. Forecast confidence has improved and is average as models are in rather good agreement with the evolution of the large scale pattern.

“There is a slight cold risk across the central and southern U.S., mainly early in the period. Otherwise, the much of the West and Plains have a slight upside risk due to an amplified pattern.”

Analysts aren’t expecting any kind of significant weather event to draw inventories low enough to cause a rally in prices. “Inventory destocking is typically at its highest level in January, given the tendency of the coldest weather to surface during this month,” said Teri Viswanath, director of natural gas trading strategy at BNP Paribas, in a note to clients. “However, [Thursday’s] release represents the slimmest January withdrawal since 2012, a comparison that was certainly not lost on the market. A warmer midday weather model run simply fortified the ongoing sell-off, sending the front of the curve to the lowest levels since September 2012.

“Moderate heating demand and strong production growth, enabled the industry to record the lightest December inventory withdrawals in three decades. This event triggered a $1 correction in natural gas prices, with the prices in the front of the curve sliding from $4 to $3/MMBtu by month end. And while colder weather has enabled heavier destocking to take place this month, the aggregate monthly drawdown will still fall short of the 5-year average level. Looking ahead to February, we see a similar pattern of variable weather limiting the call on storage.”

Once the withdrawal season ends, the market will be staring down the barrel of as much as 5 Bcf/d of additional production, and “with prices now re-aligned with 2012 levels, the question remains on whether fundamentals will contribute to the same sort precipitous collapse that occurred that year.” she said.

In overnight Globex trading March crude oil gained 32 cents to $44.85/bbl. and March RBOB gasoline fell fractionally to $1.3874/gal.